Old Age and Survivor's Insurance

The appellee, a member of the Old Order Amish who employed several other
Amish to work on his farm and in his carpentry shop, failed to withhold
Social Security taxes from the wages of his employees or to pay the
employer's share of those taxes. After the Internal Revenue Service
assessed an amount for unpaid taxes against him, the appellee made a
partial payment and sued for a refund, claiming that the imposition of
Social Security taxes violated the First Amendment rights of both he and
his employees to the free exercise of their religion. Relying upon both
the First Amendment and 26 U.S.C. 1402(g), which provides an exemption for
self-employed Amish, the district court held the statutes requiring the
claimant to pay Social Security taxes to be unconstitutional. On appeal,
the Supreme Court noted that the exemption provided by 26 U.S.C. 1402(g)
is available only to self-employed individuals and does not apply to
employers or employees. As to the constitutional claim, the court held
that, since accommodating the Amish beliefs under the circumstances would
unduly interfere with the fulfillment of the overriding governmental
interest in assuring mandatory and continuous participation in and
contribution to the Social Security system, the limitation on religious
liberty involved here was justified. Consequently, in reversing the
district court, the Supreme Court held that, unless Congress
provides otherwise, the tax imposed on employers to support the Social
Security system must be uniformly applicable to all.

BURGER, Chief Justice:

We noted probable jurisdiction to determine whether imposition of social
security taxes is unconstitutional as applied to persons who object on
religious grounds to receipt of public insurance benefits and to payment
of taxes to support public insurance funds. -- U.S. -- (1981). The
District Court concluded that the Free Exercise Clause prohibits forced
payment of social security taxes when payment of taxes and receipt of
benefits violates the taxpayer's religion. We reverse.

I

Appellee, a member of the Old Order Amish, is a self-employed farmer and
carpenter. From 1970 to 1977, appellee employed several other Amish to
work on his farm and in his carpentry shop. He failed to file the
quarterly social security tax returns required of employers, withhold
social security tax from his employees or pay the employer's share of
social security taxes.[1]

In 1978, the Internal Revenue Service assessed appellee in excess of
$27,000 for unpaid employment taxes; he paid $91 -- the amount owed for
the first quarter of 1973 -- and then sued in the United States District
Court for the Western District of Pennsylvania for a refund, claiming that
imposition of the social security taxes violated his First Amendment Free
Exercise rights and those of his Amish
employees.[2]

The District Court held the statutes requiring appellee to pay social
security and unemployment insurance taxes unconstitutional as applied. The
court noted that the Amish believe it sinful not to provide for their own
elderly and needy and therefore are religiously opposed to the national
social security system.[3] The
court also accepted appellee's contention that the Amish religion not only
prohibits the acceptance of social security benefits, but also bars all
contributions by Amish to the social security system. The District Court
observed that in light of their beliefs, Congress has accommodated
self-employed Amish and self-employed members of other religious groups
with similar beliefs by providing exemptions from social security taxes.
26 U.S.C. § 1402(g).[4] The
court's holding was based on both the exemption statute for the
self-employed and the First Amendment; appellee and others "who fall
within the carefully circumscribed definition provided in 1402(g) are
relieved from paying the employer's share of [social security taxes] as it
is an unconstitutional infringement upon the free exercise of their
religion."[5]

Direct appeal from the judgment of the District Court was taken pursuant
to 28 U.S.C. § 1252.

II

The exemption provided by § 1402(g) is available only to self-employed
individuals and does not apply to employers or employees. Consequently,
appellee and his employees are not within the express provisions of §
1402(g). Thus any exemption from payment of the employer's share of social
security taxes must come from a constitutionally-required exemption.

A

The preliminary inquiry in determining the existence of a
constitutionally-required exemption is whether the payment of social
security taxes and the receipt of benefits interferes with the Free
Exercise rights of the Amish. The Amish believe that there is a
religiously based obligation to provide for their fellow members the kind
of assistance contemplated by the social security system. Although the
government does not challenge the sincerity of this belief, the government
does contend that payment of social security taxes will not threaten the
integrity of the Amish religious belief or observance. It is not within
"the judicial function and judicial competence," however, to determine
whether appellee or the government has the proper interpretation of the
Amish faith; "[c]ourts are not arbiters of scriptural interpretation."
Thomas v. Review Bd. of Indiana Employment Sec., 101 S. Ct. 1425,
1431 (1981).[6] We therefore
accept appellee's contention that both payment and receipt of social
security benefits is forbidden by the Amish faith. Because the payment of
the taxes or receipt of benefits violates Amish religious beliefs,
compulsory participation in the social security system interferes with
their Free Exercise rights.

The conclusion that there is a conflict between the Amish faith and the
obligations imposed by the social security system is only the beginning,
however, and not the end of the inquiry. Not all burdens on religion are
unconstitutional. See, e.g., Prince v. Massachusetts, 321 U.S. 158
(1944); Reynolds v. United States, 98 U.S. 145 (1879). The state
may justify a limitation on religious liberty by showing that it is
essential to accomplish an overriding governmental interest. Thomas,
supra; Wisconsin v. Yoder, 406 U.S. 205 (1972); Gillette v. United
States, 401 U.S. 437 (1971); Sherbert v. Verner, 374 U.S. 398
(1963).

B

Because the social security system is nationwide, the governmental
interest is apparent. The social security system in the United States
serves the public interest by providing a comprehensive insurance system
with a variety of benefits available to all participants, with costs
shared by employers and
employees.[7] The social
security system is by far the largest domestic governmental program in the
United States today, distributing approximately $11 billion monthly to 36
million Americans.[8] The design
of the system requires support by mandatory contributions from covered
employers and employees. This mandatory participation is indispensable to
the fiscal vitality of the social security system. "[W]idespread
individual voluntary coverage under social security . . . would undermine
the soundness of the social security program." S. Resp. No. 404, 89th
Cong., 1st Sess., Pt. 111, U.S. Code Cong. & Admin. News (1965), pp.
1943, 2056. Moreover, a comprehensive national social security system
providing for voluntary participation would be almost a contradiction in
terms and difficult, if not impossible, to administer. Thus, the
government's interest in assuring mandatory and continuous participation
in and contribution to the social security system is very
high.[9]

C

The remaining inquiry is whether accommodating the Amish belief will
unduly interfere with fulfillment of the government interest. In
Braunfeld v. Brown, 366 U.S. 599, 605 (1961), this Court noted that
"to make accommodation between the religious action and an exercise of
state authority is a particularly delicate task . . . because resolution
in favor of the State results in the choice to the individual of either
abandoning his religious principle or facing . . . prosecution." The
difficulty in attempting to accommodate religious beliefs in the area of
taxation is that "we are a cosmopolitan nation made up of people of almost
every conceivable religious preference." Braunfeld, 366 U.S. at
606. The Court has long recognized that balance must be struck between the
values of the comprehensive social system, which rests on a complex of
actuarial factors, and the consequences of allowing religiously based
exemptions. To maintain an organized society that guarantees religious
freedom to a great variety of faith requires that some religious practices
yield to the common good. Religious beliefs can be accommodated, see
e.g., Thomas, supra; Sherbert, supra, but there is a point at which
accommodation would "radically restrict the operating latitude of the
legislature." Braunfeld, supra at
606.[10]

Unlike the situation presented in Wisconsin v. Yoder, supra, it
would be difficult to accommodate the comprehensive social security system
with myriad exceptions flowing from a wide variety of religious beliefs.
The obligation to pay the social security tax initially is not
fundamentally different from the obligation to pay income taxes; the
difference -- in theory at least -- is that the social security tax
revenues are segregated for use only in furtherance of the statutory
program. There is no principled way, however, for purposes of this case,
to distinguish between general taxes and those imposed under the Social
Security Act. If, for example, a religious adherent believes war is a sin,
and if a certain percentage of the federal budget can be identified as
devoted to war-related activities, such individuals would have a similarly
valid claim to be exempt from paying that percentage of the income tax.
The tax system could not function if denominations were allowed to
challenge the tax system because tax payments were spent in a manner that
violates their religious belief. (See e.g., Lull v. Commissioner,
602 f. 2d 1166 (CA 4 1979), cert. denied, 444 U.S. 1014 (1980);
Autenrieth v. Cullen, 418 F. 2d 586 (CA 9 1969), cert. denied, 397
U.S. 1036 1970). Because the broad public interest in maintaining a sound
tax system is of such a high order, religious belief in conflict with the
payment of taxes affords no basis for resisting the tax.

III

Congress has accommodated, to the extent compatible with a comprehensive
national program, the practices of those who believe it a violation of
their faith to participate in the social security system. In § 1402(g)
Congress granted an exemption, on religious grounds, to self-employed
Amish and others.[11]
Confining the § 1402(g) exemption to the self-employed provided for a
narrow category which was readily identifiable. Self-employed persons in a
religious community having its own "welfare" system are distinguishable
from the generality of wage earners employed by others.

Congress and the courts have been sensitive to the needs flowing from the
Free Exercise Clause, but every person cannot be shielded from all the
burden incident to exercising every aspect of the right to practice
religious beliefs. When followers of a particular sect enter into
commercial activity as a matter of choice, the limits they accept on their
own conduct as a matter of conscience and faith are not to be superimposed
on the statutory schemes which are binding on others in that activity.
Granting an exemption from social security taxes to an employer operates
to impose the employer's religious faith on the employees. Congress drew a
line in § 1402(g), exempting the self-employed Amish but not all persons
working for an Amish employer. The tax imposed on employers to support the
social security system must be uniformly applicable to all, except as
Congress provides explicitly
otherwise.[12]

[1] The Social Security Act and
its subsequent amendments provide a system of old age and unemployment
benefits. 26 U.S.C. § 3101 et seq. These benefits are supported by
various taxes, including, relevant to this appeal, the Federal Insurance
Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA) tax.
FICA is a tax paid in part by employees through withholding, 26 U.S.C. §
3101, and in part by employers through an excise tax. 26 U.S.C. § 3111.
FUTA is an excise tax imposed only on employers. 26 U.S.C. § 3301. Both
taxes are based on the wages paid to employees, and the recordkeeping and
transmittal of funds are obligations of the employer. Only FICA is
collected from self-employed individuals.

In this case appellee failed to pay the employer's portion of FICA and
FUTA taxes and failed to withhold his employee's contributions to FICA. An
employer is liable for payment of the employee's share of FICA whether or
not he withholds the required amount of the employee's contribution. 26
U.S.C. § 3102(b).

[2] Appellee also requested
injunctive relief to prevent the Commissioner of Inter Revenue from
attempting to collect the unpaid balance of the assessments. Under the
Internal Revenue Code, injunctive relief is to be granted sparingly and
only in exceptional circumstances. 26 U.S.C. § 7421(a). The District Court
therefore denied injunctive relief, but noted that should the government
attempt to collect the remaining payments "further Court relief could be
requested." District Court Op., Reprinted in Petition for Certiorari p.
8a.

[3] Appellee indicates that his
scriptural basis for this belief was: "But if any provide not . . . for
those of his own house, he hath denied the faith, and is worse than an
infidel." (I Timothy 5:8)

"(1) Exemptions. -- Any individual may file an application . . .
for an exemption from the tax imposed by this chapter if he is a member of
a recognized religious sect or division thereof and is an adherent of
established tenets or teachings of such sect or division by reason of
which he is conscientiously opposed to acceptance of the benefits of any
private or public insurance which makes payments in the event of death,
disability, old-age, or retirement or makes payments toward the cost of,
or provides services for, medical care (including the benefits of any
insurance system established by the Social Security Act)."

In order to qualify for the exemption, the applicant must waive his right
to all Social Security benefits and the Secretary of Health and Human
Services must find that the particular religious group makes sufficient
provision for its dependent members.

[5] The precise basis of the
District Court opinion is not clear. The court recognized that on its face
§ 1402(g) does not apply to appellee because he is not a self-employed
individual. The District Court nonetheless used the language of § 1402(g)
to provide an exemption for appellee. The court's decision to grant
appellee an exemption, however, appears to be based on its view that the
statute was unconstitutional as applied. Consequently, this Court has
jurisdiction under 28 U.S.C. § 1252 to hear the appeal. See also United
States v. American Friends Service Committee, 419 U.S. 7, 9 n.
4(1974).

[6] This is not an instance in
which the asserted claim is "so bizarre, so clearly nonreligious in
motivation, as not to be entitled to protection under the Free Exercise
Clause." Thomas v. Review Bd. of Indiana Employment Sec., 101 S.
Ct. 1425, 1431 (1981). At least one other religious organization has
sought an exemption under § 1402. See also Henson v. Com'r of Internal
Revenue, 66 U.S.T.C. 835 (1976) (member of Sai Baba denied exemption
because although opposed to insurance on religious grounds, the faith did
not provide of its dependent members).

[7] The Social Security Act was
enacted in 1935 to provide supplementary retirement benefits. Over the
following 45 years coverage has broadened and the cost of the system has
increased dramatically. See A. Abraham, et al., Federal Social Security
(1979). In 1939 the Act was amended to provide insurance benefits for
retired workers, auxiliaries of retired workers and survivors of deceased
workers. In 1950 coverage was extended to self-employed workers and to
select other employees previously excluded. In 1954 and 1956 disability
benefits were added and in 1965 Medicare benefits were made available to
participants in the System.

[8] National Commission on
Social Security, Social Security in America's Future 5 (1981).

[9] The fiscal soundness of the
Social Security has been the subject of several studies and of
congressional concern, see e.g., Congressional Budget Office,
Paying for Social Security: Funding Options for the Near Future (1981).

[10] See e.g., Follett v.
Town of McCormick, 321 U.S. 573 (1944) (preacher not entitled to be
free from taxes); Murdock v. Pennsylvania, 319 U.S. 105, 112 (1943)
(smae).

[11] The District Court read
this as extending to the present claims. We need not decide whether the
Free Exercise Clause compelled an exemption as provided by § 1402(g);
Congress' grant of the exemption was an effort toward accommodation. Nor
do we need to decide whether, if Congress had, as the District Court
believe, intended § 1402(g) to reach this case, conflicts with the
Establishment Clause would arise.

[12] We note that here the
statute compels contributions to the system by way of taxes; it does not
compel anyone to accept benefits. Indeed, it would be possible for an
Amish member, upon qualifying for social security benefits, to receive and
pass them along to an Amish fund having parallel objections. It is not for
us to speculate whether this would ease or mitigate the perceived sin of
participation.